Supply Chain Contracts and Food Safety

As this issue of Choices attests, food safety has become one of the most important issues facing the food industry. Unnevehr (2003) gives four reasons why food safety is more important than ever to consumers: Improved diagnostic techniques make it easier to trace illnesses to foodborne pathogens; increasing consumer affluence has led to increased demand for safer, higher quality foods; new sources of food and new production practices have introduced new risks into the food supply chain; and consumers are purchasing more prepared food and food away from home than ever before. The food industry is well aware of the market’s demand for food safety, and it continues to develop methods and adapt operations to meet this demand (Golan et al., 2004). In this issue of Choices, Roberts defines seven generic strategies employed by food companies to reduce the contamination that leads to food safety failures. Her second strategy, pathogen prevention, includes efforts to keep pathogens out of a processing facility, destroying pathogens or limiting their growth if they are already in a facility, and minimizing cross-contamination. The best way for a consumer or processor to prevent food safety failures is to make sure that inputs, ingredients, and raw materials are safe when they are purchased. In this article, I examine how supply chain contracts can be designed to improve the safety of purchased inputs. Contracts are frequently used to govern the exchange of goods, services, information, and money between supply chain participants. Even when sellers have more information about the product safety than buyers do, contracts can be used to enhance food safety.